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On January 19, 2021, several major federal financial regulators finalized rules clarifying the legal status of supervisory guidance.  As we described in a client alert late last year, a number of federal financial regulatory agencies—the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve, the Office of the Comptroller of the Currency (“OCC”), the National Credit Union Administration (“NCUA”), and the Consumer Financial Protection Bureau (“Bureau”)—had been considering proposed rules that would largely codify the 2018 Interagency Statement Clarifying the Role of Supervisory Guidance (which we previously covered in this blog post).
Continue Reading Federal Agencies Release Final Rule Clarifying the Role of Supervisory Guidance

On May 6, the Securities and Exchange Commission (“SEC”) issued an order (“Order”) directing the registered equity exchanges and the Financial Industry Regulatory Authority (“FINRA”) (together, the “Self-Regulatory Organizations” or “SROs”) to submit to the SEC a new National Market System (“NMS”) plan to govern the public dissemination of real-time, consolidated market data for NMS stocks. This new plan would replace the three existing NMS data plans for equities with a single, consolidated plan. Only SROs have voting power on the operating committees for the existing NMS data plans, but the Order directs that the new consolidated plan provide for voting by non-SROs for the first time. The Order discusses at length comments received in response to the Notice of Proposed Order issued by the SEC on January 8, 2020.

Continue Reading SEC Orders Equity Exchanges and FINRA to Submit New Single National Market System Plan for Equity Market Data

On November 19, the Basel Committee on Banking Supervision (the “BCBS”) released a report on open banking and application programming interfaces (“APIs”), focusing specifically on aspects of open banking related to customer-permissioned data sharing, including sharing between a customer’s bank and various third party firms. The report builds on the BCBS’ February 2018 paper (“Sound Practices: Implications of fintech developments for banks and bank supervisors”), which noted the increasing adoption of advanced technologies—including APIs—by banks, service providers, and fintech firms to deliver innovative financial products and services. The key findings from the report are outlined below.

Continue Reading Basel Committee on Banking Supervision Releases Report on Open Banking

On November 6, the Consumer Financial Protection Bureau (“CFPB”) held a symposium on the prospective implementation of Section 1071 of the Dodd-Frank Act, codified as 15 U.S.C. § 1691c-2, which requires financial institutions to inquire about and report to the CFPB whether a business credit applicant is a women-owned, minority-owned, or small business. The CFPB may make such information available to the public. Section 1071 is often viewed as HMDA for small business, a reference to the Home Mortgage Disclosure Act, which requires financial institutions to collect and report information about mortgage applicants to the CFPB, some of which is made public.

Section 1071 amended the Equal Credit Opportunity Act of 1974 in 2010 to “facilitate enforcement of fair lending laws” and to “enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.” In 2011, the CFPB announced that financial institutions’ obligations to collect information under the law would not go into effect until it issued implementing regulations. To date, however, the CFPB has not issued proposed or final regulations to implement Section 1071.

In her prepared remarks, CFPB Director Kathy Kraninger reassured symposium participants that Section 1071 rulemaking will be done with “care and consideration,” and with the goal of maintaining access to credit for small businesses, suggesting that the CFPB will exercise caution as it seeks to implement the law. Earlier this year, Director Kraninger and the CFPB were named as defendants in a lawsuit alleging a violation of the Administrative Procedures Act because the CFPB has not yet issued Section 1071 implementing regulations.


Continue Reading CFPB Holds Symposium on Section 1071 of Dodd-Frank

On Tuesday, June 25, the Consumer Financial Protection Bureau (the “CFPB”) convened the first in a new series of symposia on consumer protection topics. The symposium series was announced in Director Kathleen Kraninger’s first major speech as the Bureau’s Director on April 17, 2019. The intent of the series is to initiate dialogue with stakeholders that will inform the Bureau’s future rulemakings. The topic of the first symposium, in which our colleague Eric Mogilnicki participated, was the meaning of “abusive acts or practices” under section 1031 of the Dodd–Frank Act. The “abusive” standard has been on the Bureau’s rulemaking agenda since the fall of 2018. 
Continue Reading First CFPB Symposium Focuses on “Abusive” Acts or Practices Standard

On May 21, 2019, the U.S. Securities and Exchange Commission (the “SEC”) issued guidance to national securities exchanges and the Financial Industry Regulatory Authority (“FINRA”) (referred to as “SROs”) clarifying the SEC’s expectations with respect to their market data fees. These guidelines clarify enhanced standards for SROs to increase their fees for products and services, including fees for market data and connections, which has become a significant revenue source for data providers.
Continue Reading SEC Issues Guidance on Changes to Stock Exchange Fees for Market Data and Connections

On May 9, 2019, the Financial Crimes Enforcement Network (“FinCEN”) published interpretive guidance to reiterate how FinCEN’s existing regulations relating to money services businesses (“MSBs”) apply to business models involving convertible virtual currencies (“CVCs”). The guidance is the most significant CVC-related guidance that FinCEN has released since its 2013 guidance on the application of money transmission regulations to CVC transactions. The guidance does not establish any new regulatory requirements but, rather, synthesizes FinCEN’s existing framework of regulations, administrative rulings, and guidance since 2011 and applies this framework to common business models involving CVCs.

Continue Reading FinCEN Issues Guidance to Synthesize Regulatory Framework for Virtual Currency

On April 11, 2019, Acting Director of the Office of Management and Budget (the “OMB”) Russell T. Vought sent a memorandum to executive department and federal regulatory agency heads regarding compliance with the Congressional Review Act (the “CRA”). The memorandum clarifies that the CRA applies to “a wide range of other regulatory actions” beyond notice-and-comment rulemaking, including “guidance documents, general statements of policy, and interpretive rules.” The memorandum also formalizes a process for how the Office of Information and Regulatory Affairs (“OIRA”) will classify regulatory actions for CRA purposes. The memorandum could significantly tighten Congress’ control over regulatory agencies.
Continue Reading OMB Memorandum Paves the Way for Increased Congressional Oversight of Regulatory Agencies

The Bureau of Consumer Financial Protection (the “CFPB” or “Bureau”) announced a trio of policies in September and December of 2018 intended to provide regulatory relief to banks and fintech companies developing new financial products and innovative disclosure methods, as part of its ongoing effort to promote innovation in financial technology. In public comments on the Bureau’s policy initiatives, consumer groups and some state attorneys general voiced concerns that the policies may harm consumers, while industry groups generally supported the initiatives.

Continue Reading Consumer Groups and Some States Oppose CFPB Policies Aimed at Promoting Fintech Innovation

On January 9, 2019, a divided three-judge panel of the Ninth Circuit held that the Federal National Mortgage Association, or Fannie Mae, is not a “consumer reporting agency” within the meaning of the Fair Credit Reporting Act (the “FCRA”). The case, Zabriskie v. Federal National Mortgage Association, was brought by prospective borrowers who were unable to refinance their current mortgage loans due to allegedly erroneous information in their credit histories, as reported by Fannie Mae software that is commonly used by mortgage lenders.

Continue Reading Fannie Mae is Not a Consumer Reporting Agency Under the FCRA, Ninth Circuit Says